Hi Customer,
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Based on your description, allow me to provide you with the information.
The statement 2. The 50,000 limit applies to individual items (e.g 50,000 documents each with 1+ author reaches the 50,000 limit) is the correct statement.
The SharePoint Online limit of 50,000 unique security scopes per list or library refers to the number of items (such as documents or folders) that have unique permissions, not the total number of individual users or permission entries.
In other words, if you break inheritance on an item—meaning you assign it permissions different from the parent list or library—that item counts as one unique security scope.
So, 50,000 items with unique permissions would reach the limit, regardless of how many users are assigned to each item
Microsoft also recommends keeping the number of uniquely permissioned items below 5,000 to maintain optimal performance.
Exceeding this recommended threshold can lead to slower performance and administrative challenges, even if you're still under the technical cap of 50,000.
If your use case requires more than that, it's best to consider reorganizing your content across multiple libraries or using groups to manage permissions more efficiently.
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Clover-L - MSFT | Microsoft Community Support Specialist.